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Executive Summary –Current and Emerging Trends
Retail Private Label Brands in Europe
The ‘Retail Label Brands in Europe’Special Report provides us with a clear indication that with rising unemployment and a majoreconomic crisis in Europe, shoppers are more cautious than ever and continue to look for ways to maintain and even reduce the costof their weekly grocery shop. This shopper behaviour has helped retailers’own brands continue to strengthen their position againstnational brands across Europe; home of the most mature private label market in the world. Shoppers in Europe buy nearly as manyprivate label products as they do national brands and in some countries they are viewed as equal to, or better than, many nationallybranded products.With an average 30% discount on national brands, private label goods provide shoppers with a strong value proposition. The valueshare of private label goods has increased in every country –and is now an average of 30% across the region. Most shoppers aremore price-driven than they have ever been in the recent past. They are also more alert to the concept of quality and value. Retailersrecognised that price is not the single differentiator for all shoppers and cannot tempt everyone away from national brands. As a resultthey have invested in the development of a wider variety of competitive offerings. Multi-tiered private label offers meet consumers atthe Premium, Standard and Value points often with differentiatedfeatures at the higher priced levels. The Premium end offers morethan the same for less money. Indeed, in some categories, the private label offer will be the most expensive and innovative productavailable.As well as innovating at the product level, retailers have developed clear branding and assortment strategies and leverage theircontrol of shelf space and pricing to drive profile. This presents a real threat to national brands as SKUs (Stock Keeping Units) arerationalised in categories to make way for new private label products. Consumers often perceive private label brands to be ‘real’brands in their own right, making it seem increasingly likely they will be able to grow market share further and build shoppers’loyaltyto the retailer. However, despite the advances of private label,penetration is lower in categories where the consumer has a strongrelationship with brands. National brand manufacturers have not rested on their laurels. They are developing new products andtechnologies that will bolster their differentiation, are becoming more aggressive with pricing and continue to evolve newmerchandising and promotional strategies.
The market share of private label has increased across Europe. The value share of private label products varies from as much as49.2% of all FMCG products sold in the United Kingdom to 16.1% in Italy. This compares to 18.5% in the USA.
Cost-conscious shoppers are attracted by an average 30% price advantage that retailers offer over nationally branded products.
Consumers still prefer to buy national brands if they can do soat the same price as a retailer own branded product.
Private label products are now available in 9 out of every 10 FMCG categories, giving consumers more brand choice options onevery item they buy.